If you're applying for a mortgage or any other kind of loan, it is important to have a solid credit score. If your credit score is low, you'll be offered a much higher interest rate. If it is extremely low, you might not qualify for a mortgage or other kind of loan at all. Millions of people in the United States have low credit scores, and unfortunately, few people are working to change that. If your credit score is low, do all that you can to begin that climb toward a perfect score. Here are five tips you can use to start on that journey to better credit:
Tip #1: Close old accounts.
When your credit score is figured out, one of the things they take into account is your debt potential. Sure, you might not have much debt today, but if you wanted to, how much debt could you accumulate over the next few hours? For example, if you have three credit cards, each with a limit of $10,000, your debt potential is $30,000. That's pretty high, even if you are only carrying balances on two of those cards and the total of those balances is under $500. So, if there are cards you are not using, close them. Don't forget that store credit cards, like the ones they get you to sign up for in order to get a percentage off of your purchase, also contribute to this debt. Make sure that you close the accounts if you don't want them - cutting up the card isn't enough.
Tip #2: Negotiate with lenders to pay old debts.
Are you having trouble paying an old credit card bill or other kind of loan? Maybe you have a $5000 doctor bill from five years ago before you had health insurance. Maybe you bought a car and still owe money on it, even though you crashed that car and it is now a pile of scrap metal. These kinds of debts are weighing you down, and it is tempting to pay other bills first and pay these only if you have some extra money lying around. Don't fall into that trap! Instead, call lenders and work out a payment plan that works for you. If you can't pay off the debt all at once, ask if they are willing to reduce the debt a bit if you pay it off more quickly. Or, if you can't afford that, as if they will accept lower monthly payments if you pay a higher interest rate over time. The goal here is to pay your debts on time every month, whatever that payment plan will be.
Tip #3: Check for mistakes.
You should be checking your credit score annually for mistakes. Yes, mistakes happen, even on such an important document as your credit history report. Because of basic human error, numbers get entered incorrectly quite easily. This means that you could be listed as having $100,000 worth of debt instead of $10,000 worth of debt! Even worse, if the person enters the social security number incorrectly, you could be listed as having debt when you don't have any at all. The errors can also come directly from your lenders, or they could be a result of identity theft. No matter how they happened, check your credit score annually to clear up the problems.
Tip #4: Ask for help.
A financial professional is your best bet for raising your credit score significantly. If you're just not good with money, it might be time to admit that and ask for help. A financial professional and recommend a budget plan that works for you, as well as help you negotiate your bills with lenders or, if it is in your best interest, consolidate your loans.
Tip #5: Avoid foreclosure.
Foreclosure wreaks havoc on your credit score, and that information remains on your credit history for seven years n most cases. Instead of allowing your home to be foreclosed, it is a much better option to try to sell it yourself. That isn't always possible, be f you foresee money problems in your future, do your best to get your home on the market and sell it in order to repay your own mortgage. It is better than the bank doing it for you!
Of all of the tips above, there is one financial tips that is even better - be proactive about your financial history. Although dealing with money can be difficult, if you are responsible from the start, you should be able to keep your credit score fairly high.
To begin with, the credit bureaus do make mistake, while it doesn't happen often, it does happen.
Also a bill that you paid to a big department store or local appliance store may still be reported by that store as 'unpaid'. You've heard it said 'the right hand doesn't know what the left hand is doing', and as you may already know, sometimes it doesn't.
By looking at your credit and questioning the problems, or presenting the 'paid' receipts, you can quickly, sometimes even in a week or less, get those 'black marks' on your credit cleaned up.
I am sure you have heard about identity theft and maybe a friend of yours, a relative or you have been a victim.?
Identity theft has been going on for years, however it is becoming a much more common occurrence today and will continue to increase in occurrence.
While you probably can't stop it from occurring, you can decrease the risk by reviewing and question your credit score rating at least annually.
There are services that you can pay for to monitor your credit and if or when a new credit card is applied for, or a major purchase is made with your credit you are notified. These services are not cheap, but they come as close as possible from preventing it.
So you've used one of those 'free credit' places and you see some 'funny' things that shouldn't be on you credit. How do you go about questioning your credit score and taking care of those 'funny' things on your credit?
There are ways that you can get a copy of your credit report.
If you have recently applied for credit and have been denied for any reason, you will receive a letter providing you with a reason for the denial and instructions on how to get your credit report information.
You can also get a tri-merged credit report from the three main credit bureaus: Experian, Transunion and Equifax from a 'paid' online service. The 'free' ones just show one of the credit bureaus and is usually less readable than the ones you pay for.
In reviewing your credit you see that somebody has stolen your identity and has taken out new credit in your name or has made purchases in your name you need to contact the credit reporting agencies to dispute the reports also contact the creditor responsible regarding the inaccuracy.
To dispute inaccurate information directly with the credit reporting agencies, you must explain the inaccuracies in writing. Include copies of documents that support your position and you should also include a copy of your credit report, and mark the items in question.
In your letter, be sure to include:
1. Your full name
2. Your complete mailing address
3. Your date of birth
4. Your Social Security number
5. The name and account number of the creditor and item in question (Partial account numbers as listed on your credit report are accepted)
6. The reason for your disagreement with the disputed item - be specific
Both Stephanie Larkin & Mike Herman are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Stephanie Larkin has sinced written about articles on various topics from Kitchen Home Improvement, Marketing and Bahamas Vacation. About Author: Stephanie Larkin is a freelance writer who writes about topics pertaining to the mortgage industry such as how to . Stephanie Larkin's top article generates over 49500 views. to your Favourites.
Mike Herman has sinced written about articles on various topics from Mental Health, Arthritis Signs and Sleep Disorders. Go to And Learn More About Your Credit And. Mike Herman's top article generates over 49500 views. to your Favourites.